Startup Costs for a Retail Bakery

back to the third page of Start Up Costs for a Bakery

Where we left off: Startup Costs for a Home Bakery

Permits, Licenses & Business Certificates
$300

Equipment
$500

Supplies
$500

Packaging
$150

Advertising
$350

Miscellaneous
$500

TOTAL
$2300

With an extra $1000 for 2 more months of supplies (which you'll need to account for now, because you've got a rental commitment), you were starting with $3300 in required funds for the home bakery. Adding a retail location changes everything.

Startup costs:

Rent deposit
$2400

Renovations to location
$1500

Decorations/furniture for location
$1000

Permits, Licenses & Business Certificates
$300

Equipment
$7500

Startup Supplies
$2000

Startup Packaging
$750

Startup Advertising
$1500

Miscellaneous/Legal
$1000

TOTAL
$17950

Monthly Overhead costs:

Rent
$1500

Utilities
$300

60 hours a week counter employee @ $13 an hour
780 x 4 = $3120

30 hours a week baking employee @ $18 an hour
540 x 4 = $2160

Insurance
$400

New Equipment (ongoing)
$300

Monthly Supplies
$1500

Monthly Packaging
$450

Monthly Advertising
$300

Monthly Miscellaneous/Legal
$300

TOTAL MONTHLY OVERHEAD
$10330

By these numbers, if you needed 6 months operating expenses plus startup costs, your required startup money would be $79,930, or about $80,000. That's a lot of money, but for a business launch its actually pretty conservative. Most of these estimates, like rent and equipment, are quite frugal, but there is enough money in this budget to get from A to B. With 3 months operating expenses, your startup costs drop to $48,940.

Note that the counter employee is working 60 hours a week (more likely you'll have three working 20 hours a week). This lets you have an employee on duty during all open hours, six days a week, 8am to 6pm. You'll also have help in the kitchen for 30 hours a week. However, that leaves you covering everything else, and according to this budget, it leaves you completely unpaid. Most business owners start out unpaid, but it is really not a good idea. I would recommend being good to yourself and having your business pay you $10 (wow, you're a cheap hire) an hour for 60 hours of work a week. Add all the employee taxes and other fees, and you'll cost $13 an hour, like your counter employee. That makes for an additional $3120 a month in overhead expenses, bringing your real total to $13,450.

Breakeven Analysis

This is going to be a crude breakeven analysis, but it is critical to cover it. You need to know how long it will take, and what it will take, to recoup your startup costs and start making a profit. Let's be generous and give you 2 full years to earn back your $18,000 in startup costs. That's $18,000 / 24 = $750 a month. Add 10% for debt interest and you're at $825 a month.

To cover your monthly costs, and pay 25% in taxes, and pay yourself even a pittance, you'll need to be bringing in $13,450 x 1.25 = $16,816 a month. Add your $825 in startup costs plus debt interest, and you'll need to bring in $16,816 + $825 = $17,638 a month.

That works out to $735 in sales for every business day you're open (six days a week, four weeks a month). If you're open from 8am to 6pm, that's 10 hours in the business day, which means you need to be seeing $73.50 in sales ringing through that register every hour to break even.

Start a Home Bakery

Buying a Bakery

How to Open a Bakery

How to Start a Cupcake Business

Start a Dog Bakery

Cottage Food Laws and Home Bakeries

Write a Bakery Business Plan

Choose a Name for Your Bakery

Bakery Equipment - What You Need to Start Your Bakery

Bakery Management Software: Spend a Little or a Lot

Starting a Catering Business

Startup Costs for a Home Bakery

Startup Costs for a Retail Bakery

Licenses and Permits Required to Start a Bakery

Create a Great Bakery Storefront

Developing a Bakery Brand Identity

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